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Over the past decade, the distribution of household incomes has shifted so much that a much larger proportion of consumers now earn significantly higher-than-average incomes—while still falling short of being truly rich. As a result, what used to be a no-man’s-land for new product introductions has in many categories become an extremely profitable “new middle ground.”

How can marketers capitalize on this new territory? The key, say the authors, is to rethink the positioning and design of offerings and the ways they can be brought to market.

Take, for instance, how Procter & Gamble redefined the positioning map for tooth-whitening solutions. A decade ago, dental centers were popularizing expensive bleaching techniques that put the price of a professionally brightened smile in the $400 range. At the low end, consumers also had the choice of whitening toothpastes that cost anywhere from $2 to $8. P&G wisely positioned itself between the two ends, successfully targeting the new mass market with its $35 Whitestrips.

In product categories where it’s clear the middle ground has already been populated, it’s important for companies to design or redesign offerings to compete. An example is the Polo shirt. How do you sell a man yet another one after he’s bought every color he wants? Add some features, and call it a golf shirt. Here, marketers have introduced designs based on the concept of “occasional use” in order to stand out.

Finally, companies wishing to reach the “almost rich” can change how they go to market. Perhaps no mass retailer has made a stronger bid for the mass affluent than Target Stores, which has pioneered a focus the company itself characterizes as upscale discount. The strategy has made Target an everyday shopping phenomenon among well-heeled urbanites and prosperous professionals.

The Idea in Brief

Are you missing the hottest growth opportunity the economy has seen in ages: the expanding affluent class? This new mass market represents 49% of the nation’s income—but only 37% of its consumption.

How to persuade these newly moneyed consumers to spend more of their untapped discretionary income on your products and services? Fill the gap between run-of-the-mill mainstream offerings that leave mass affluents cold, and high-end luxury offerings just beyond their reach. Assume a price point two to ten times higher than your current offering—then imagine an enhanced product or service that would give customers “luxury” benefits without jaw-dropping price tags. Procter & Gamble did this with Whitestrips, positioning the $40 teeth-whitening product between $8 Rembrandt (a whitening toothpaste) and $400 bleaching techniques available through dentists.

Strategies for Selling to the Moneyed Masses

Fill the gap between mainstream and luxury products and services. And deliver extra value by giving consumers preferred access to your offering. Example:

Members of Colorado ski resort Copper Mountain’s Beeline Advantage program get the first runs of the morning on fresh powder, as well as faster-moving lift lines, by paying twice the normal lift-ticket price.

Capture mass affluents’ attention. Consider making changes in any of these areas:

How consumers use your product. Specialized versions of everyday products hold particular appeal for the well-heeled. When Nike modified a slow-selling lightweight running shoe for water-sport use, the first 50,000 pairs sold out in less than a month.

How consumers pay for your product. Rethink how your offering is paid for, and what “ownership” means. Thanks to Chicago-based Exotic Car Share, a whole new tier of well-off consumers can buy one-fifth shares in rare, antique, and luxury automobiles such as the Lamborghini Murciélago.

What consumers value. As people become wealthier, they adopt an investment mind-set, prizing things that appreciate in value. Consider making your offerings perform like investments. High-end men’s shoe maker Allen-Edmonds charges customers half of what they’d pay for a new pair to “recraft” their current pair. The deal signals the shoes’ high quality, increases initial sales, and yields higher margins than original manufacture.

Reach mass affluents through new channels and promotions. Consider these tactics:

Establish distinctive areas in stores. Sears partners with Dell by placing kiosks in its stores, clearly branded and distinct from Sears’ more general areas.

Adapt promotions to the realities of affluents’ lives. Captivate Network equips office high-rise elevators with TV screens, mixing advertising spots with news and weather forecasts from major media-company partners. The ads provide a welcome diversion, and content reaches consumers when they’re more likely to act on the information, not when they’re at home wanting a well-earned rest.

Quick question: What do Whitestrips, the SpinBrush, and the Swiffer have in common? Aside from the fact they’re all made by Procter & Gamble, all have launched new billion-dollar industries in categories that have been stagnant—some would say dead—for many years. In addition, they all have price points that are multiples higher than their competitors on the shelves—and simultaneously many times lower than the high-end solutions to the problems they address. And they all share enviable margins—three to five times higher than the market leaders they supersede.

Yet one of the most interesting things all three products have in common is what’s absent: any evidence of microtargeting. These offerings didn’t come about because a company zeroed in on profitable customer subsegments. Quite the contrary: They are generic, expected to serve millions of consumers across multiple traditional segments. In other words, in a commercial environment smitten with CRM and “markets of one,” they are unabashedly mass market.

In this article, we argue that products like Whitestrips, the SpinBrush, and the Swiffer are only the beginning. Thanks to a dramatic shift in the distribution of U.S. household incomes, a whole new tier of mass market offerings suddenly makes sense. A vast new middle ground has opened up between what previously constituted the mass and high-end choices, and for many companies, capturing that ground is the most promising route to profitable growth. This is exactly what P&G has set out to do, and that’s why it’s no fluke that our first three examples come from that company. In a 2003 earnings conference call, Procter & Gamble CEO A.G. Lafley put it this way: “One of the things we focus on when we try to grow a new category or create a new category, and this is what we did with whitening, is we try to bring things out of the professional area, and I’m not talking about brands, but I’m talking about habits and practices that you can do at home with less risk, more ease, and all the rest of it.” He went on to mention hair coloring, where P&G was innovating at the moment, but the point was that the same kind of middle-ground strategy could be pursued in many, many other markets.

Similar opportunity exists in your business, too. But to capitalize on it, first you’ll need to rethink how to position your offerings and even reconsider the entire “position map” of your industry. Next, you’ll have to design or modify your offerings with a more affluent mass market in mind. And finally, you’ll need to adjust how you go to market, in terms of both retail channels and promotions. In the sections that follow, we’ll explore these three challenges and how some companies are addressing them with imagination and style. Their experiences make one thing clear: Success at mass marketing comes not from obeying its timeworn rules but from reinventing the rules for today’s mass market.

The New Shape of the Mass Market

A funny thing happened to U.S. household income while marketers weren’t looking: Its distribution curve changed dramatically. (See the graph in the sidebar “The Emergence of Mass Affluence.”) It used to be that incomes clustered intensely at or near the average level. A huge proportion of households, in other words, made essentially the same amount of money. Past that hump, the numbers of households earning at greater increments dropped off precipitously. But note the change since 1970. That cliff no longer exists; in its place is an attenuated slope. What this means for marketers is that a vast new space has opened up for offerings that were once not economical enough to pursue.

A vast new space has opened up for offerings that were once not economical enough to pursue.

The Emergence of Mass Affluence

Between 1970 and 2000, a major shift took place in the distribution of U.S. household earnings. Few experts have noted that shift in part because they’re used to seeing distorted income distribution curves. For whatever reason, the U.S. Census information we often see graphed uses an x-axis with unequal increments. The amount of horizontal space used to represent a $5,000 difference in income is collapsed and expanded in such a way that the distribution takes on the appearance of a bell curve. People who see such versions can be forgiven for believing that income in the U.S. is fairly normally distributed. Our version holds the increments on the x-axis constant, revealing what economists know to be the truth about U.S. income distribution: that it is a log-normal distribution, high on the left, followed by a steep slope down.

Under the old income distribution, there were two kinds of offerings: affordably priced mainstream offerings for the middle wage earner (think $2 toothpastes and toothbrushes) and luxury or professional offerings priced so high that only a very small number of buyers indulged in them (think $1,000 tooth-whitening treatments). For companies operating in any given category of goods or services, having offerings in these two distinct markets meant the marketplace was fully served. Now, however, there are enough people earning at increments between the average and the top incomes that many market positions in between are economically viable. (SpinBrush: $10. Whitestrips: $35.) Therefore, the company that still considers the markets of the very rich and the masses to be two distinct markets is undoubtedly leaving a lot of money on the table.

A look at the exhibit “Consumer Spending by Top Earners” gives a sense of just how much money is on the table. It shows that, despite the income increases many U.S. households have experienced during the last 30 years, their spending has not kept pace. The top quintile (households earning over $68,522 in 1984 and $84,016 in 2002, in 2002 real dollars) used to spend roughly 74% of their income. They now spend just 66% of it. As a result, the top-earning households now account for 49% of the total income in the United States, but only 37% of total spending. To be sure, the increased marginal utility of saving in a rising market explains some of that difference, as does the fact that higher-income earners are always in a better position to save. Possibly, some families who have been very well-off are suffering economic anxieties today and are being cautious about their spending. Still, the fact that consumption expenditures have lagged so dramatically behind earnings growth suggests a failure by marketers to address, or better stimulate, these households’ needs and desires.

Consumer Spending by Top Earners

This bar chart shows average household expenditure as a percentage of income (before taxes)* for the top 20% of earners in the United States. Despite the rollercoaster pattern from 1984 to 2002, spending overall has followed a downward trajectory.

And where have marketers been looking, to have missed these broad market trends? They’ve been relentlessly focused on increasingly narrow segments of their customer base. For decades, marketing theory and practice have been moving toward the “market of one”; modern companies have learned to think in terms of “customer-centricity.” Marketers have the tools now to separate out great customers from good customers from merely okay customers—and to focus their attention on the most valuable tiers. But in the single-minded pursuit of wallet share, they’ve failed to see the forest for the triage.

Even the few who have perceived the shift may have missed its import. What we are seeing is a ratcheting up of income levels—a new “mass affluence,” as it’s been called. At first glance, we might simply think that goods are being consumed in greater quantity or that prices of basic products are now rising in step with income. But what’s happening is more fundamental than that. At a certain point, a saturation level is reached. Once our houses are warm, we don’t make them uncomfortably hot just because we have the money. With such affluence, U.S. consumers don’t buy more of what they already have, and they’re certainly no longer concentrating on subsistence and fighting the elements. There has been a step change, and we are now operating at a higher level in Maslow’s famous hierarchy of needs. If John Kenneth Galbraith was right in calling us an affluent society in 1958, then surely by now we are a mature or even postaffluent society. Whatever the terminology, we have entered a new era marked by a new psychology of selling and consumption. As with any societal shift, there are people in the vanguard, but we’re at the point now that the shift is becoming a mass phenomenon.

Repositioning and the New Middle Ground

What does the new shape of today’s market mean to consumer goods companies? For most of them, the best chances for growth lie not in increased microsegmentation but in an updated form of mass marketing—with its central tenets continuing to be scale production and sales largely to anonymous customers. Note that we are not recommending that managers simply return to traditional mass-marketing approaches. Rather, they should practice a new approach: one that looks to the basic components of mass marketing—positioning, the design of offerings, and go-to-market strategies—but that reformulates them with the new, moneyed masses in mind. (See the table “Seven Ways to Tap the Mass Affluent.”)

Seven Ways to Tap the Mass Affluent

Let’s start with positioning, where most marketers will recognize the conventional wisdom by its initials: STP. The order of business has been to segment customers first, then target the attractive segments, and then position offerings accordingly. It remains a reasonable approach, but the problem is, it can quickly lead to very small segments. And while those valuable customers will buy more enhanced offerings, the various enhancements will not add up to something with broad appeal. Rather than go down those rabbit holes, we’re recommending that marketers try to make a positioning decision before they target and segment. We base that recommendation on a broad survey we conducted in 2002 of more than 3,500 consumers, who told us that when they shopped, they often found that they had to choose between products that cost less than they were willing to pay and were not satisfying their needs and products that were too expensive. They perceived a large gap, in other words, between the run-of-the-mill mass market offerings and the high-end luxury offerings.

Of course, that gap was always there, but consumers now feel it more. And ironically, the fact that consumers are chafing about it reflects that it is a smaller gap than it used to be. Here’s why. Consider tooth-whitening solutions, in which the highest-end functionality two decades ago was a complicated and expensive capping procedure performed by dentists. Meanwhile, the category position where most toothpaste makers were competing was around a $2 price point. Innovation by the mass marketers focused on improving whitening performance, and that led to marginally higher price points. Tom’s of Maine, with exotic ingredients like propolis and myrrh, now fetches about $5 per tube. Rembrandt is almost $8. But over the same period, dental centers were popularizing new bleaching techniques that put the price of a professionally brightened smile in the $400 range, as opposed to the $1,000 it might have cost before. At that price point, an offering is still not an everyday expense, but for the newly moneyed masses, it does become an option—and suddenly, the consumer is keenly aware of the middle ground between the two ends of the spectrum. Procter & Gamble moved into this middle ground first with its $35 Whitestrips.

The new middle ground is now emerging in other product categories. Many marketers, however, fail to see it because they continue to draw positioning maps in traditional ways. Consider what a Kraft Foods marketer said about the company’s decision to launch its DiGiorno line of frozen pizzas. In 1996, frozen pizza was a 50 cent to $2.50 proposition, and the brands at the top of that range were considered high-end. Mary Kay Haben, whose work on DiGiorno made her Brandweek’s “marketer of the year,” told that magazine, “When we first started, there was that initial skepticism. Will anybody pay $5.59 for a frozen pizza given that they’re used to getting two for $5?” The key was what had been happening in the restaurant pizza business in the years just prior. Home delivery (the high-end product) had dropped to a $7 price point, making it a weekly habit for many families and not an occasional indulgence. Marketers might not have noticed, but the position map had been reframed, so that what had been a no-man’s-land between the professional and mass market offering was now a middle ground to be seized—in this case, frozen pizzas of pizza-parlor quality that cost between $2.50 and $7.

How do you find a new middle ground in your own category? Here’s an exercise that might help. First, identify all the benefits your existing offering delivers. Then consider all the really expensive high-end offerings out on the market that satisfy the customer needs that your product does. This expands the positioning map. (In their book Why Not?, innovation scholars Barry Nalebuff and Ian Ayres refer to this as imagining, “What would Croesus do?”) Next, pick a price point that is substantially higher than your category’s average (anywhere from two to ten times higher is a good start) but still below the high-end solution, and then imagine what you could possibly offer given the freedom to spend—on development as well as delivery—what these price points would give you. What unmet customer needs could be addressed, and what innovative approaches might be considered, if you were expecting to make that kind of money? This should lead to ideas like creating a $10 battery-operated toothbrush—positioned well below $60 rechargeable ones but well above the $3 or so upper limit for manual toothbrushes—as opposed to finding yet another way to angle bristles on a $2 brush.

In certain cases, delivering the extra value will mean giving consumers enhanced access to your offering. This is what Copper Mountain, a ski resort in Colorado, has done with its Beeline Advantage program. Those willing to pay $124 for a day of skiing, roughly twice the normal lift ticket price, enjoy two advantages: They get the first runs of the morning on fresh powder (because the mountain is open 15 minutes early for them), and they spend less time in lift lines (thanks to specially designated Beeline queues). This kind of repositioning makes sense to companies that have tremendous sunk costs in their existing assets and lack the flexibility to come up with fundamentally new products. Universal Studios Theme Parks had the same insight that, because a day could not be made longer, the way to enhance the offering would be to let people spend less of that day standing in line. The standard one-day pass at its Hollywood park is $49, but for $99 you can purchase a “Front of Line Pass,” and for $129, a “VIP Experience,” including special behind-the-scenes access to facilities.

It’s not an idea that’s limited to recreation destinations. Dell has been testing a Priority Call Routing program that allows customers to pay $89 and for three years have their calls for technical support moved to the front of the line.

Other companies are successfully selling status—that is, the privileged tier of service that once came only with loyal patronage. Rental car agencies were among the earliest companies to sell this better treatment outright, regardless of usage level, for an annual fee. Now companies from airlines to restaurants are following suit. It makes sense. Some customers who don’t do a large volume of business with a company still value the extras enough to pay for them. In fact, customers with low usage levels who pay for recognition are potentially more profitable than loyal customers, who are likely to take fuller, more-frequent advantage of a company’s perks.

Selling access in these ways is not without risks. Marketing academics have noted that the opportunity for such “discriminatory pricing” works best with goods and services that are frivolous in nature. Applying such pricing to items regarded as necessities is likely to spur a negative reaction from consumers. Indeed, our research confirmed that most consumers are somewhat uncomfortable with companies creating differentiated offerings in most categories. This may be changing, however. Hospitals routinely permit patients to pay extra for private rooms; some maternity wards offer suites to rival the Four Seasons. And a private company called MDVIP has been growing steadily since its launch in 2000 with a model not unlike Dell’s. Patients who pay up front to be members get faster access to and more face time with their physicians.

Redesigning Offerings for the Mass Affluent

Once it’s clear there is a new middle ground in a category, a key challenge becomes designing or redesigning an offering to appeal to the mass affluent. Companies will find they can make highly effective changes in any of three core areas: They can alter the consumption context of their product, its payment or exchange model, or its value proposition to the customer.

Changing the consumption context means finding new situations or conditions in which your product can perform and then making subtle alterations to fit those circumstances. A perfect example is Nike’s successful marketing of a shoe especially suited to water sports. It’s an interesting story because the innovation was somewhat serendipitous. Nike noticed that one of its lightweight running shoes, which had been a failure in the broader market, had become a favorite of windsurfers. The shoe provided traction in the water and cushion against rough ground, but it didn’t get waterlogged enough to weigh down a person’s foot. The company made some quick modifications to the shape, added neon colors, and voilà—the Aqua Sock was born. The first 50,000 pairs sold out in less than a month, and production quickly jumped to 3,000 pairs a day.

This type of marketing, which is perfectly suited to reaching the moneyed masses, is quite different from the mass marketing of the past. Before, the key was to find products that could cut across consumption contexts. Polo shirts were a hit because they fit into many occasions. But how do you sell a man yet another polo shirt once he’s bought every color he wants? Add some features, and call it a golf shirt! This focus on what we call “occasional use” has been employed by wineglass maker Riedel. While the Austrian firm has been in the glass business for nearly 300 years, its growth hit a new trajectory after Claus Riedel introduced a series of ten glasses, each shaped and sized to do justice to a particular type of wine. The innovation further narrowed the occasion of use for what seemed to be an already distinctly tailored product, the wineglass. That was in 1973. Today, Riedel offers more than 80 different glasses, ranging from $8 to $85 per stem, and sells over five million of them annually.

This isn’t as frivolous as it may appear. If you know an avid woodworker, for example, you know how he covets that 3/8″ spindle gouge—or whatever highly specialized device he lacks. Everyone enjoys using the right tool for the right job. The key is to understand that, due to mass affluence, the opportunity to serve that desire is heightened. Not only do people have the wherewithal to buy specially designed risotto pots, they also find themselves in a broader range of contexts in which such products would make sense. Consider that, in decades past, activities for the rich and poor alike tended to be more circumscribed. The rich had more activities, perhaps, but they still hewed to a certain lifestyle. Today, mass affluence means a man is as likely to need a tuxedo as a bowling shirt. And new versions of everyday products, designed for special-use occasions, are now a major growth opportunity.

Everyone enjoys using the right tool for the right job. The key is to understand that, due to mass affluence, the opportunity to serve that desire is heightened.

A second way to modify your offering in light of today’s mass affluence is to rethink the offering’s exchange model—that is, how it is paid for—and more broadly, what it means to own the good. What if there were no givens in your category as to rights of ownership, payment options, or expected duration of ownership? A Chicago-based company called Exotic Car Share assumed just that and created a new equity ownership program for rare, antique, and luxury automobiles. The program makes it possible to buy a one-fifth share in a Ferrari 360 Modena Spider, for example, or Lamborghini Murciélago or Bentley Arnage T. For founder George Kiebala, the business model was a natural extension of the fractional ownership already common in jets, vacation properties, and even yachts. As with those goods, his company’s offering made a genuine luxury accessible to a whole new tier of buyers.

Beyond reducing price points, this kind of arrangement responds more deeply to the needs of today’s moneyed masses. They are discovering what the megarich have often observed (without getting much sympathy): that ownership has its burdens. Every oceanfront home, vintage car, or precious piece of art requires care—so much that it often seems you don’t own your possessions, they own you. Marketers would do well to consider that problem carefully, because the upkeep of possessions is no longer a problem for the megarich alone. Many of us who cannot afford full-time household managers have amassed unprecedented numbers of material goods, from computing and entertainment systems to snowblowers and cappuccino makers—and we have less time to care for our possessions than we did in the past. (Americans, on average, worked almost 100 hours more per year in 2000 than they did in 1980.) What’s more, there’s a growing “claustrophobia of abundance,” asserts marketing consultancy Yankelovich Partners, caused by the fact that “people just feel overwhelmed by [their] stuff.” There’s a reason that California Closets, which customizes storage solutions for home owners, grew sixfold from 1996 to 2002.

Ownership can be less onerous, too, when it doesn’t endure as long. This is why international retailer IKEA is working to change consumers’ attitudes about furniture purchases. Its $50 million TV advertising campaign satirizes the sentimental attachments people have to old, and often ugly, home goods. When the ads’ protagonists replace their furniture, a narrator chastises viewers for taking pity on the old items. “You are crazy,” he tells the audience. IKEA marketer Christian Mathieu talked about the impetus for the campaign in a recent conversation. “We considered how Swatch, for example, changed its category,” he said. “The company transformed watches from rare purchases into more affordable items that consumers bought as fashion statements.” If furniture and watches can change, why not rethink the ownership models of other categories? Jewelry and art come to mind as other opportunities. In both cases, high cost is only one reason a customer might be disinclined to buy; another is the prospect of having to live with one’s choice. Slowly a market is forming (part of which is a viable resale market) to allow consumers to lease original artworks just as they do automobiles.

A third way to rethink and renovate offerings is in terms of their value proposition to buyers. Marketers must realize that, as people become wealthier, they adopt more of an investment mind-set. They do, of course, invest more in financial instruments than the less affluent. But at the same time, many of the things the truly wealthy buy appreciate in value. The implication for marketers is that it will be easier to sell to the mass affluent market if they can make their products perform more like investments. Note that apparel retailer Talbots, which surely targets the mass affluent buyer, uses the term “dividends” to describe its frequent shopper program, reinforcing the company’s commitment to offering valuable, investment-quality clothing.

Allen-Edmonds, a maker of high-end men’s shoes, provides a slightly different kind of investment appeal by offering customers a “recrafting” service. For about half what a man would pay for a new pair of Allen-Edmonds shoes, he can have his current pair refurbished and looking as good as ever. At the outset, the idea of offering such a service was controversial within the company; the risk of cannibalizing new sales is an obvious one. In practice, however, the approach has paid off on three fronts. The promise of recrafting (and what it signals about the intrinsic quality of the shoe) increases the value proposition, driving increased initial sales. The need to drop off worn shoes for recrafting at a retail outlet means more traffic in the stores. And, critically, recrafting yields higher margins than original manufacture does. If you thought buyers of expensive shoes wouldn’t bother getting them fixed, then you don’t know the moneyed masses. Lou Ripple, Allen-Edmonds’s director of sales and marketing, told us, “It’s not unheard of for us to have customers recraft the same pair of shoes five or six times.”

Reaching the Nouveau Niche

So far in this article, we’ve proposed new rules for positioning and designing offerings to suit today’s consumers. What’s left to examine is the challenge of going to market. Finding the right retail channels to bring goods to the masses has always been difficult, and like so much of mass marketing, it needs to be rethought for the current era.

The imperative for retailers is clear. They must preserve the proven advantages that have brought them mass market success so far—customer-facing features like accessibility, selection, and service, and operational features like supply-chain efficiency—while also serving a far more diverse and upscale set of needs. That means making a direct appeal to more affluent consumers, with steps ranging from determining and delivering better in-store assortments, to creating more highly tailored, conveniently located retail outlets.

At the most basic level, we see stores expanding the upper end of their assortments. Perhaps no mass retailer has made a stronger bid for mass affluent consumers than Target Stores, which has pioneered a focus the company itself characterizes as “upscale discount.” Target’s activities provide a blueprint for other merchants; the company has commissioned esteemed brands like Calphalon and Waverly to launch affordable lines of their kitchen and home products for its stores, while recruiting well-known designers—notably Michael Graves and Philippe Starck—to create exclusive items with a European flavor. The strategy has made Target an everyday shopping phenomenon among well-heeled urbanites and prosperous professionals. The higher a consumer’s income bracket, the more likely she is to prefer Target to competitors like Wal-Mart and Kmart. (According to a recent CNN/USA Today Gallup Poll, only 16% of consumers earning $16,000 or less shop at Target, but that percentage grows to 47% among those with annual incomes exceeding $75,000.) Wal-Mart has been responding by cautiously adding items such as fresh herbs, gourmet desserts, digital cameras, and 14-karat (rather than 10-karat) gold jewelry to its stores in upscale suburbs like Plano, Texas, and Alpharetta, Georgia.

Perhaps no mass retailer has made a stronger bid for mass affluent consumers than Target Stores, which has pioneered a focus the company characterizes as “upscale discount.”

Beyond upgrading assortments, some retailers have carved out a spot for their more affluent customers—literally—by creating stores within stores. An example is Sears’s decision to partner with Dell by placing kiosks in its stores, clearly branded and distinct from the store’s more general areas. Sears has also introduced its recently acquired clothing line Lands’ End as a form of in-store boutique.

But perhaps the most effective strategy for serving affluent customers is to give them entire stores or malls of their own. If you’ve been to one of the “lifestyle centers” built by developers Poag & McEwen, you’ve had a taste of this concept. These complexes feature open-air shopping, high-end stores, and parking lot access to every shop. And because they are small compared with typical malls, they can be located closer to affluent neighborhoods. Aesthetically, too, they are a far cry from the walled retail fortresses often found in suburban hubs. Sophisticated landscaping and architecture lend more of a Main Street quality to the centers. Most appealing to customers is the attitudinal shift these complexes imply; they reject the notion of a shopping center as a destination in itself. The strategy is not to lure the masses out to the hinterlands for a shopping extravaganza—the Mall of America in Minneapolis being a good example of this—but to serve the masses locally in familiar surroundings. As a result, lifestyle center customers average five visits per month as compared with three for the mall, and they spend 50% more per visit. With stores like Williams-Sonoma, Pottery Barn, and Coldwater Creek, but no anchor stores, and a variety of restaurants, spas, and salons, Poag & McEwen’s centers earn an average of $397 per square foot (with some earning up to $500) while regional malls earn less than $300.

Reaching the mass market is about having the right retail channels, as we’ve said. But it’s even more famously about promotion—the sloganeering, media buying, and couponing that drum up demand. And, in an era when marketing and technology have drilled down to the level of individual customers, this is the aspect of mass marketing considered most passé. Conventional wisdom says it simply isn’t possible to communicate a message to everyone, let alone cost-effectively. As media have splintered and proliferated, and consumers have gained sophistication (both technical and psychological) in blocking out advertising, we’ve seen the rise of direct marketing, interactive marketing, even permission marketing. Is it possible to contemplate “mass” promotion to an affluent customer base?

The answer is yes, but the promotion schemes must be better suited to the realities of the lives of the moneyed masses. One company that hits them where they live is Captivate Network. It equips elevators in office high-rises with flat-panel TV screens and sells advertising spots, which it mixes in with programming (news headlines and weather forecasts, for instance) from major media-company partners. Given people’s tendency to avoid eye contact in elevators, and the very low likelihood of their pulling out reading material, the ads become an almost welcome—and certainly inescapable—diversion. Not only is the demographic spot-on for targeting mass affluence, the ads are wonderfully timed; they reach consumers when they are up and moving, not hunkered down at home wanting only a well-earned rest.

This is just one of the mass promotion techniques we found particularly apropos for the moneyed masses. We’ve seen companies successfully retool traditional mass-advertising and promotion methods by creatively altering where the sale is situated, who is involved in the selling, and what is given as an incentive. Johnnie Walker, for example, hosts blended whiskey tastings for select groups of consumers. It’s an effective strategy given the marketing challenge they faced as single-malt Scotches gained a broader following. Advertising might not have convinced anyone that a blended whiskey could in fact be superior to a single malt—but the company’s experts, further credentialed by their rich Scottish accents, could make the point to a group of influencers and get something of a buzz going.

The Trickle-Up Effect

In this article, we’ve made many suggestions for marketing to today’s more moneyed consumers. We’ve highlighted the emergence of a new consumer market, which, by virtue of being “mass” and also affluent, constitutes the biggest growth opportunity out there for many companies. And we’ve drawn lessons from the companies that have experimented with new strategies and been successful.

Are we completely comfortable with urging marketers to start mining this vein? Is there any honor in teaching companies not to leave money on the table? If more of the world’s nearly rich and merely rich are caused to part with more of their discretionary income, is that a good thing?

Yes, yes, and yes. And if we had any doubts on that score, we were reassured by new research coming out of Northwestern University. Kiminori Matsuyama, an economist there, recently published a fascinating analysis of the effects of income distributions on mass consumption in developed societies. His work shows that two virtuous cycles are in effect in mass consumption. The first is a trickle-down effect, whereby price decreases (from increased productivity, learning-curve improvements, and scale efficiencies) lead to increased demand and consumer access at ever-decreasing levels of income. DVD players, for instance, have gone from $199 to $39—easily accessible now to most any consumer.

But there is also a trickle-up effect that is equally important to the health of an economy. “Trickle up” refers to the fact that, as prices of goods drop, the richer consumers who once spent more to buy those goods end up experiencing, in effect, a bonus in the form of dollars freed up to be spent elsewhere. More dollars in their pockets means they can reach to a higher price point for some other desired good they could not otherwise afford. And more buyers in those categories, in turn, lead to increased competition and innovation there, pushing prices down, renewing the whole cycle once again.

The trickle up of spare dollars, therefore, fuels an explosive expansion of the economy. But that’s only the case, Matsuyama theorizes, if income is distributed in a certain way, as it is now. Without the kind of attenuated slope seen in the sidebar “The Emergence of Mass Affluence,” gaps appear in the sequence, and the dominoes don’t fall. Isolated markets can form at the top and bottom of the income range, and innovation is prevented from flowing across markets. The smoother and more continuous the range of incomes in a mass consumption economy, the smoother the flow of innovation down to the lowest earners. Matsuyama says, “Income distribution should be neither too equal nor too unequal. If it is too equal, the process [of innovation and consumption flow] does not begin. If it is too unequal, it stops prematurely.”

When everybody participates in the flow of innovation, everybody stands to benefit. When some people are shut out or opt out, the whole system suffers. Right now, we’ve got a mass of people representing 49% of the nation’s income but only 37% of its consumption. Time to get them back in the pool.

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